iesy Repository GmbH - Irish Stock Exchange

variable retention plan of 2002 and working capital deficit, deferred income excess or deficit and capital expenditures excess
or deficit. In addition, the amount of any loss determined as having been caused by any pre-Closing breach of the Share
Purchase Agreement by Kabelnetz Ltd. will be deducted from the consideration paid by iesy Hessen. Any such loss will also
lead to a reduction in the total escrow amount (the “Escrow Amount”) as described under “—Escrow arrangement” below.
On Closing, iesy Hessen paid the consideration based on agreed draft financial statements (“Effective Date Accounts”)
(with accelerated determination by a third party in the absence of agreement). The final amount of Cash Consideration will
not be known until accounts, drawn up as at the Effective Date (as defined in the Share Purchase Agreement), are agreed
between iesy Hessen and Kabelnetz Ltd. or otherwise determined. It is anticipated that this process of determination could be
complete 90 days after Closing, but the process may take up to five months after Closing. Any post-Closing decrease in the
purchase price will be to the detriment of the bank account that holds the net escrow amount (the “Escrow Account”) and any
post-Closing increase in the purchase price will be paid by iesy Hessen for the benefit of the shareholders and noteholders
that made the escrow election (as described below) (the “Escrow Shareholders” and “Escrow Noteholders” respectively) only
(subject to a right of set-off in favor of iesy Hessen to the extent that the amount in the Escrow Account has been insufficient
to satisfy its claims).
The Issuer has agreed to guarantee iesy Hessen’s payment obligations under the Share Purchase Agreement.
Reinvestment in TopCo by certain electing ish shareholders and noteholders
At the closing of the ish Acquisition, certain ish shareholders and noteholders made an election to use the consideration
received in connection with the ish Acquisition to buy shares in TopCo, the parent of the combined entity; as a result, former
iesy shareholders were diluted and received cash. For additional information on TopCo’s shareholders following the ish
Acquisition, see “Security Ownership.”
Escrow Arrangement
An amount of €42.9 million of the Cash Consideration at Closing will be retained in an Escrow Account for a period of
12 months from Closing to satisfy any successful warranty/indemnity claims made by iesy Hessen, or to meet any adjustment
to the Effective Date Accounts when they are finalized after Closing.
The escrow amount will also be reduced by the amount of any deduction from the purchase price for any pre-Closing
breach of warranty or other breach of the Share Purchase Agreement (subject to a floor equal to the lesser of €15 million or
the amount that would be paid into the Escrow Account before taking account of such pre-Closing deductions).
Upon expiry of the 12 month escrow period, subject to the resolution of any pending claims, any amounts remaining in
the Escrow Account will be distributed on a pro rata basis (according to their entitlements) to ish shareholders and
noteholders who elected to receive a portion of their consideration on a deferred basis from the escrow account.
Warranties and Indemnities
Kabelnetz Ltd. has warranted and agreed to indemnify iesy Hessen in relation to certain matters. Certain of the
warranties are deemed to be repeated at Closing. The subject matter of the warranties includes:
(i) accuracy of 2003 audited accounts and 2004 unaudited (or, when final, audited) accounts;
(ii) the businesses being sold having full ownership of or a valid right to use all of their assets;
(iii) no liabilities (including contingent) in ish above a certain threshold other than as noted in the relevant
accounts or disclosed;
(iv) enforceability of all contracts of ish with a value above a certain threshold and certain other material
contracts;
(v) full disclosure of litigation and threatened litigation;
(vi) absence of material adverse change in the businesses of ish since December 31, 2004;
(vii) certain employee benefit and labor-related matters;
(viii) legal title and litigation related issues; and
(ix) full disclosure of material facts by Kabelnetz Ltd., including in relation to legal title to the ish entities and
litigation with the insolvency administrator of Callahan HoldCo.
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